Another peanut harvest has come to an end, and the fields of southern Georgia are littered with gray vines, which will fertilize next year’s crop.
For farmers in southern Georgia, 2012 was a record-setting year; 2013 paled in comparison. As they talk about 2014 and how the markets might change, one thing always comes up: China’s massive potential market.
“We had a spectacular crop in 2012,” said David Chase, who’s been farming here for 20 years. “That has weighed on the market into 2013, and it might still be shelled into 2014.”
The United States exported its largest yield of peanuts in 2012, nearly 265,000 tons, valued at $470 million. According to peanut experts, that’s a crop and a half.
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The record-setting harvest yielded an excess supply that would have sat in warehouses, but Georgia found a new trading partner: China. While China usually imports peanuts from India, a terrible drought in 2012 destroyed nearly all of that country’s crop.
Instead, the Chinese turned to the U.S., with shipment after shipment heading across the Pacific. On Dec. 28, 2012, for example, a ship that left the port in Savannah, Ga., carried $357,000 worth of peanuts, destined for the Port of Qingdao in China, according to records maintained by PIERS, an export and import tracking service. On Jan. 30, a shipment that contained $244,000 worth of “runner jumbo peanut” made its way east. Many others followed.
“In the 2012-2013 year, for the first time ever, we’ve exported significant shipments to China,” said Stephanie Grunenfelder, the vice president of international marketing for the American Peanut Council. In late 2012 and early 2013, the U.S. exported about 76,000 tons of peanuts to China.
“That’s a third of our overall sales in three months, from nothing the year before,” she said.
Georgia is the leading peanut producer in the United States, providing more than 45 percent of the American crop per year, according to data from the University of Georgia. Since trading with China in 2012, Georgia’s economy stands to gain even more ground internationally, but that future is uncertain.
“China is something we’re really going to be watching over the next couple of years, because they have an emerging middle class,” Grunenfelder said.
After two consecutive years of drought, all the stars aligned for perfect weather during the 2012 growing season.
That led to a massive crop. And although farmers might have overplanted, Grunenfelder said that because of China, they were able to export more than they thought they would.Grunenfelder said that with more disposable income in China, people there would spend more on their diets. In China, peanut oil is used for cooking much more than it is in the United States.“It’s one of their main ingredients, so they have a strong demand for peanuts, peanut snacks and peanut oil,” Grunenfelder said.
Joe West, the executive vice president of sales at a peanut-shelling facility in Georgia, said that when it came to the global increase in demand for peanuts, everything depended on price.
Although China is the world’s largest peanut grower and exporter, it’s gradually been consuming more than it produces, so it must import peanuts from elsewhere. China reached out to the U.S. because the record 2012 crop in Georgia sold at a low price.
“We’ve never seen such an influx of volume at one time in buying interest,” West said. “It wasn’t easy, but the overall experience with China was good. It was a learning experience.”
Historically, peanuts were considered a regional food of the South. After the Civil War, technological advancements increased their demand, and noted scientist George Washington Carver encouraged farmers to use peanuts as a rotational crop for cotton production.
The peanut is a staple of American culture and childhood, but foreign countries consume a lot of Georgia’s crop. Canada is the biggest market outside the U.S., importing just under 40 percent of U.S. peanuts. The European Union imports about 30 percent, followed by Mexico, at 20 percent, and Japan, at 10 percent, according to Grunenfelder.
With peanut harvests nearly complete, the National Agricultural Statistics Service has estimated that final production numbers for 2013 will be about 40 percent lower than the record-setting 2012 numbers.
Jason Moore, a peanut broker at JRJ Brokerage Co. Inc. in Albany, Ga., visited China earlier this year, hoping to establish stronger ties with clients. He said price would determine future trade.
“They are very price-conscious people,” Moore said. “So if the Indian crop is a good one, then they will have plenty of peanuts to import and crush for oil.”
India’s peanut crop in 2013 was back to what it was before the drought.
Chase, the Georgia farmer, has witnessed trends in his industry changing as global imports have increased. He agreed that the Chinese are price-sensitive, but said trade opportunities did exist if the price was right.
“At a certain level, the Chinese could be a great trading partner,” he said.
While peanut trade with China is new for Georgia, commitment to the domestic market, the local farmers and shelling facilities hasn’t waned.
West, the sheller, offered one possibility of guaranteed, profitable trade for years to come: “If only you can get the Chinese eating peanut butter.”